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bne May 2021 Companies & Markets I 5
country of 10.7 million people, putting it in third place in terms of customers, and ranking it second in consumer finance.
Challenger bank
Air Bank, founded in 2011, is the most high profile of the home-grown challenger banks on the Czech market. They also include Fio and Equa Bank (which is currently being taken over by Austria’s RBI). Air Bank claims to be the second most successful neo-bank in the CEE region in terms of market share and revenue per customer, but unlike the leader, Russia’s Tinkoff, which was founded in 2006, right from the beginning it has offered full-service retail banking.
Air Bank has successfully challenged the highly profitable traditional banks by offering simple contracts, lower fees and better service to internet-savvy customers who are also cost conscious.
“Assuming the merger does go through, the rise of Air Bank will be an earthquake for the Czech banking system”
“Air Bank was the one that positioned itself in a different area from the beginning – the other incumbents are trying to catch up,” Strcula told bne IntelliNews in an interview just before Kellner’s death. “We cannot rely on physical distribution and that forces us to think how to get the service to customers in
a digital way.”
The Air Bank IT system is modern and bespoke, unlike the patched together legacy systems of the traditional banks. The bank does not have a front-end system for its branches – they use the same system as clients do.
“It is hugely important to be without legacy systems issues,” said Strcula. “All systems are quite modern and we developed them as we wanted them to be developed, tailored to the needs of our customers.”
Strcula said Air Bank was one of the first Czech banks to offer Apple Pay and Google Pay. It releases a dozen new versions of its mobile app every year to introduce new features and streamline existing ones. For example, the latest release introduced chatbots, including voicebots that navigate clients to block their card with a voice command if they have to.
“We can get new things out in weeks to customers,” added Strcula. “That gives us a huge, huge advantage. That is something that the incumbent banks have difficulty catching up on.”
Air Bank’s customers tend to be younger, more urban and wealthier than other banks’ clients, and they are much more
comfortable with the internet. Although it has 34 branches, most customers do the overwhelming majority of their transactions either via computer or smartphone – around 600,000 of their 865,000 customers use mobile banking.
Air Bank customers also use their bank cards 15 times a month, 50% more than peers, and 22% use their accounts daily, double the market average.
This internet-focused strategy has worked on the Czech market as the country has often been an early adopter of new banking technologies such as contactless cards. The pandemic has merely accelerated the digital trend, and made customers of other banks wish their lenders had more up-to-date systems.
Strcula said that what differentiates Air Bank form other neo-banks in Europe is that it has always been a fully-fledged digital retail bank with its focus on the primary banking relationship – rather than starting out as a monoliner – and that it is already highly profitable, with a return on tangible equity last year of 17.2%.
“The root cause behind the results is that we have been by nature a very savvy online-focused organisation from the beginning,” said Strcula. “We are clearly the biggest and fastest growing neo-bank on the market.”
Though it has domestic neo-bank competitors – and the traditional players such as Erste Group’s Ceska Sporitelna have improved their online offering – Strcula said so far it has been largely protected from wider neo-bank competititon because Czechia is outside the Eurozone. “The Czech crown made it
a bit more difficult for some of the other fintech and digital banks to tap into [the market],” he pointed out.
Rich valuation
The plan to merge with Moneta has been controversial, partly because of Kellner’s reputation as the killer whale in the Czech fish tank, partly because of the valuation of Air Bank.
This was Kellner’s second attempt to merge the two banks. Two years after Moneta’s CZK35bn IPO in 2016, he offered to sell
Air Bank CEO Michal Strcula (photo Air Bank).
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